RACHEL MADDOW, HOST: Good evening, Lawrence. You know, he is I think my new best friend, but I don‘t think I‘m his.

O‘DONNELL: Rachel, people are starting to talk about you two.

MADDOW: I know, which was my whole plan.

Thank you, Lawrence. Appreciate it, letting the cat out of the bag that way.

Thanks to you at home for staying with us for the next hour.

Hey, Wisconsin, you won. There has been no ceremony, there has been no applause yet, there has been no formal surrender ceremony—but I am telling you, you have won. Congratulations, Wisconsin.

After 22 days of protests in the state that is the cradle of the rights of Americans who work for a living, after 22 days of protests against Republican Governor Scott Walker‘s efforts to strip union rights in Wisconsin, the governor has started to crumble. The governor started to cave. The governor started to do what he said he would never do.

(BEGIN VIDEO CLIP)

GOV. SCOTT WALKER ®, WISCONSIN: The bottom line is we‘re trying to balance the budget. And there‘s really no room to negotiate on that.

(END VIDEO CLIP)

MADDOW: No room to negotiate. That was Governor Scott Walker more than two weeks ago insisting as he did repeatedly that he was not willing to negotiate. He was not willing to budge on union stripping.

But as it turns out, that after picking this fight, after saying he would never negotiate, Governor Walker is negotiating now.

If you live in Wisconsin, here are some of the headlines that you woke up to in your local newspapers this morning.

This is “The Reporter” newspaper, which is from Fond Du Lac, “Walker says no to meeting.”

“The Daily Tribune,” which is from Wisconsin Rapids, their headline is “Walker refuses to meet senators.”

“The La Crosse Tribune”: “Walker rebuffs request to meet.”

Newspaper after newspaper after newspaper all across Wisconsin this morning, essentially slamming Governor Scott Walker on their front pages for not budging, for not negotiating, for not being willing to talk, for not being willing to even meet with the state Senate Democrats.

With these headlines across Wisconsin newspapers this morning, another conservative firm released yet another poll of Wisconsin voters that showed even from this conservative activist pollster that the state is firmly against Walker‘s plan. Five points more against it than they were just five days ago.

Also today, the conservative-leaning “Milwaukee Journal Sentinel” front-paged on their Web site a very blunt analysis that Governor Walker is the most disapproved of new governor in the entire nation. Even though that paper endorsed Scott Walker, even though they leaned right, they are also now editorializing against Walker‘s union stripping folly.

Then came news today that Scott Walker‘s own party, the state‘s Senate Republicans caucused, and the news from that caucus was not good for the governor. Remember, the governor can only afford to lose three Republican senators and still get his union-stripping bill passed. And three Republican senators have now made public comments that the Republican governor should compromise.

And so, after 22 days of escalating protests, after effectively locking down the state capitol, after the video footage of the Democratic state assemblyman being wrestled to the ground by police officers as he tried to go to his office, after the country and the state and even Republicans in his own state turned against him, Mr. “I Won‘t Negotiate” admits he‘s negotiating.

This, of course, is not over yet. Senate Democrats in Wisconsin have not returned to the state capitol. These begrudgingly e-mailed offers from the governor are not the same as legislation being withdrawn or new legislation being introduced. But essentially, Governor “I Won‘t Budge” has been forced to budge. He lost this one.

And more importantly, he lost it on the substance. And he lost it publicly in a very big way. And the longer it goes on, the worse he loses it.

It is all over but the shouting. Wisconsin, you won.

Can we just take a second to let that sink in for a moment?

OK. As I said, the out of state Wisconsin Senate Democrats are still out of state. They are not claiming victory on this yet. They say there‘s no clarity yet that Governor Walker‘s budging move at this point. They say those moves are confusing and suspicious.

And they‘re right to be suspicious. We heard the governor talking about his strategy for tricking the Democrats to come back to the state capitol on the prank phone call when he thought he was talking to David Koch, the oil and chemical billionaire.

So, as a Wisconsin Senate Democrats continue to be cautious and are not claiming victory, it should be noted that implications nationally of the Democrats winning this fight in Wisconsin should probably wait for a bit. That would be premature.

But the Republicans losing this fight? Not premature to look at that. They picked this fight weeks ago. It is relatively easy to have clarity about what they did now.

And I think it‘s important to have clarity about that because when this story about Scott Walker and the Republicans losing this fight that they picked, gets told by all of the Beltway press sometime in the next 24 to 72 hours whenever they have caught onto it, that story will be told, I promise you, as if this was some story about the budget—as if this was a fight about whether or not Wisconsin is going to be able to balance its budget.

But when the stories are inevitably written, they will be wrong. This was never about the budget. As soon as Scott Walker was sworn in as Wisconsin‘s governor, the very first day, he called special session of the state legislature which ultimately passed four pieces of legislation that he favored. Collectively, those four pieces of legislation will end up making the state budget deficit in Wisconsin $140 million worse, not better, worse.

That was Governor Walker‘s first priority as governor, to make the deficit $140 million worse. Not to close the budget shortfall, but to open it further over the next few years with business tax giveaways, $140 million worth.

The big fight over public sector employees was in the end not about what those employees get paid, not about what they contribute to their pensions, not about how much health care costs they pay for—everything Republicans wanted in terms of fiscal concessions from people who work for the state, they got them. Public employees conceded. They gave Republicans everything they asked for in terms of paid give backs, pension, health care, all the rest of it—everything with budget impact, the public employees gave up right away, right at the outset.

If it was really about the budget, then those concessions would have sort of solved the problem, would have been enough. But it‘s not about the budget.

And so, instead, we have had 22 days of protests over what? Over the stuff that‘s in these e-mails, the stuff that Governor Walker appears to be caving on now, finally, after all of this time.

The fight they‘ve been having in Wisconsin is not about money. It‘s not about what people get paid. It was about union rights. It was about something that has no fiscal impact whatsoever. It is about stuff that Scott Walker is now effectively conceding.

It‘s not about the budget. They said it was about the budget, but that was to justify doing stuff that had no fiscal impact.

Here‘s how else you know it wasn‘t about the budget. Governor Walker‘s emergency “budget repair bill,” that‘s what he called it, right, also found the time in the midst of this emergency to overturn a Wisconsin law that says insurance companies have to cover contraception. What is the fiscal impact of that? What does that do to Wisconsin‘s state budget? Nothing.

The governor also cuts all the money the state spends on family planning services, places that provide access to contraception. They also do stuff like breast cancer screening and prostate cancer screening. The state spends just a little under $2 million annually on those services.

But if they stop spending that money, they also may put at risk $9 million that they get from the federal government to support that state service. It‘s easy math. It‘s not about the budget.

In order for Scott Walker to wage that little war on contraception and prostate cancer screening, he is willing to potentially make Wisconsin‘s budget deficit $7 million worse, not make it better, make it worse.

It is not about the budget. And it‘s not about the budget anywhere that Republican governors are doing these things this year.

In Florida today, we got new Republican Governor Rick Scott, big (ph) state of the state address, massive budget cuts to the state‘s education system, massive budget cuts in particular to the state‘s K through 12 education system, $1.7 billion cut out of K-12 alone, cut out of public schools in Florida.

What are you going to do? We don‘t have a choice. We don‘t have any choice. We‘re broke. We‘ve got to make these cuts.

K-12 education is being cut at the knees. Yes, but the state needs to save that money, right? Is the state saving that money? No, the state is not.

Governor Scott is giving that money away. The money he is saving by taking it out of schools he is giving away as corporate tax breaks and property tax breaks.

So, hey, Florida, those cuts that are going to cut K-12 education off at the knees is going to make your state deficit precisely not better. Those cuts for K-12 are not going to do anything to help your budget deficit. It‘s not about the budget. They say it is about the budget, it is not about the budget.

In Ohio, New Republican Governor John Kasich delivered his state of the state address today as well. Mr. Kasich and state Republicans, however, have just sort of forgotten to try to even make it look like it‘s their agenda—make it look like their agenda has anything to do with the state‘s budget. They put forward an even more draconian union-stripping proposal than even the one that‘s being tried in Wisconsin.

Again, stripping collective bargaining rights is not a fiscal issue, it‘s a rights issue. But Mr. Kasich and Ohio Republicans outdid themselves on the “it‘s not about the budget” front by including a gay marriage ban in their supposed budget rescue bill. Gay marriage is already banned in Ohio, but this apparently provides for an extra, double, triple, quadruple ban.

What is the fiscal impact of extra triply, quadruply banning gay marriage in Ohio? Nothing. It has no budget impact. It is not about the budget.

“The Columbus Dispatch” newspaper has one of those awesome widgets on their Web sites where you can try to balance the budget yourself. You can choose things for Ohio that would make the budget problem worse or make the budget problem better. Banning gay marriage—not one of the available options because it does neither. Stripping collective bargaining rights? Not one of the options.

Because those things are not actually about balancing the budget.

Those are things that are being pursued under the guise of economic stress.

But it‘s actually in Michigan where this is maybe the most stark and the most amazing. In Michigan, the new Republican governor is a man named Rick Snyder. Rick Snyder does not get a lot of national attention, but boy, howdy, he ought to.

What Governor Snyder is doing, I think, tells you in particular how clueless the Beltway press has been about what is actually happening in the states in Republican politics. If you listen to the Beltway press, even those who are willing to be critical of the Republicans, they say things like—well, real fiscal conservatives would consider raising taxes as well as cutting spending to address their state‘s budget shortfalls. That is actually happening in some places. Look what they are trying to do in Michigan.

He is going to raise taxes on seniors and on poor people -- $1.7 billion in tax hikes for Michigan seniors and Michigan‘s poor people, and for people who want to make tax deductible donation to public universities.

Sorry, you know, Michigan has a budget problem. We‘re going to have to raise a whole lot of money from you. Poor people, old people, people supporting public schooling, you have to take the hit because the state needs to save that money.

Is the state saving that money? No, the state is not. Governor Snyder is taking all of that money that the state will gain and he is not using it to close the budget gap. He is giving it away in the form of $1.8 billion in corporate tax cuts. He is taking in $1.7 billion in higher taxes from poor people an old people and giving it away, $1.8 billion to businesses.

Net short term effect on the state‘s budget? Zero or worse.

It is not about the budget. It is really not. It is not about the budget in Wisconsin, it is not about the budget in Florida, it is not about the budget in Ohio, it is not about the budget in Michigan.

But what Michiganders know and what Michiganders have been trying to get the rest of the country to pay attention to is that what these Republicans are doing in the states is not just not about the budget. It‘s about something way worse than that.

Stay with me for a moment here. There is more to this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

(CHANTING)

(END VIDEO CLIP)

MADDOW: Why are these people in Michigan so loud? Why are these people in Michigan so mad?

It‘s not just because they haven‘t won yet, like the protesters in Wisconsin have, it‘s because Michigan Republicans are telling them that they are about to lose their right to elect local government. The governor is going to take care of that from now on. See? The governor knows best.

MADDOW: The Michigan house has already passed and the Michigan Senate is about to pass a bill that sounds like it is out of a dystopian, leftist novel from the future. If you think that Republican governors across the country are using fiscal crisis as a pretext to do stuff they otherwise want to do, this is something I don‘t think I ever would have believed Republicans even wanted to do.

But this is what they are proposing. It hasn‘t really gotten much national attention. But please, just check this out. Governor Rick Snyder‘s budget in Michigan is expected to cut aid to cities and towns so much that a lot of cities and towns in Michigan are expected to be in dire financial straights. Right now, Governor Snyder is pushing a bill that would give himself, Governor Snyder, and his administration, the power to declare any town or school district to be in a financial emergency.

If a town was declared by the governor and his administration to be in a financial emergency, they would get to put somebody in charge of that town, and they want to give that emergency manager they just put in charge of the town the power to, quote, “reject, modify, or terminate” any contract the town may have entered into, including any collective bargaining agreements.

So, this emergency person who gets put in charge of a town deemed to be in financial crisis by the governor‘s administration, this emergency person gets to strip the town of union rights, unilaterally, by their own personal authority. But this emergency person also gets the power under this bill to suspend or dismiss elected officials. Think about that for a second. It doesn‘t matter who you voted for in Michigan, it doesn‘t matter who you elected, your elected local government can be dismissed at will.

The emergency person sent in by the Rick Snyder administration could recommend that a school district be absorbed into another school district. That emergency person is also granted power specifically to disincorporate or dissolve entire city governments.

What year was your town founded? Does it say so like on the town border as you drive into town? Does it say what year your town was founded? What did your town‘s founding fathers and mothers have to go through in order to incorporate your town?

Republicans in Michigan want to be able to unilaterally abolish your town and disincorporate it, regardless of what you as a resident think about it. You don‘t have the right to express an opinion about it through your locally elected officials who represent you, because the Republicans in Michigan say they reserve the right to dismiss your measly elected officials and to do what they want instead because they know best.

The version of this bill that passed Republican-controlled Michigan house said it was fine for this emergency power to declare a fiscal emergency invoking all of these extreme powers. It was fine for that power to be held by a corporation.

So swaths of Michigan could, at the governor‘s disposal, be handed over to the discretion of a company. You still want your town to exist? Take it up with the board of directors of this corporation that will be overseeing your future now. Or rather don‘t take it up with them. Frankly, they are not interested.

Instead of thinking of Michigan as the Upper and Lower Peninsula, let‘s think about Amway-stan, right? The area between Pontiac and Flint could be a nice Dow Chemical-ville, maybe.

The power to overrule and suspend elected government justified by a financial emergency. Oh, and how do you know when you‘re in a financial emergency? Because the governor tells you you‘re in a financial emergency. Or a company he hires to do so does that instead.

The Senate version of the bill in Michigan says it has to be humans declaring the fiscal emergency. The house bill says a firm can do that just as well.

This is about a lot of things. This is not about a budget. This is using or fabricating crisis to push for an agenda you‘d never be able to sell under normal circumstances.

And so, you have to convince everyone that these are not normal circumstances. These are desperate circumstances. And your desperate measures are therefore somehow required.

What this is has a name. It is called shock doctrine.

Joining us now is Naomi Klein, columnist at “The Nation,” fellow at The Nation Institute, and author of the book “The Shock Doctrine: The Rise of Disaster, Capitalism,” which is in effect book-length warning of all this.

Naomi, thank you for being here.

NAOMI KLEIN, “THE SHOCK DOCTRINE”: Glad to be with you, Rachel.

MADDOW: Do you see disaster capitalism at work in these state budget fights? Because I do.

KLEIN: Yes, I definitely do. And—but it‘s important to remember that these guys have been at this for 30 years. I mean, they‘re part of an ideological movement and they believe in a whole bunch of stuff that‘s not very popular.

You know, there are some policies in the ideological Republican playbook that a lot of people like: everyone likes a tax break. But if you talk about you‘re privatizing the local water system, busting unions, privatizing entire towns, things like this, if you run an election and say this is what I plan to do, you—chances are you will lose that election. And this is where crises come in. They are very, very handy, because you can say we have no choice.

You don‘t have to win the argument any more. You just have to say the sky is falling in. We have to do this. You can consolidate power.

We remember this from the Bush administration. They did this at the federal level. After 9/11, they said, we have a crisis, and we have to essentially rule by fiat.

So, the first stage is to consolidate power. But that‘s not the end goal. It‘s just to hoard the power. It‘s then to auction off the states because these guys really don‘t believe in the governments that they are running. I mean, this is a really old story.

But, you know, if you look at what‘s going on in Wisconsin, why are

why are they so desperate to tie the hands of unions? Why are 16 states facing similar battles?

Unions are the final line of defense against privatization of the public sector. Unions are the ones who fight privatization of the school system, of the water system, of the power system. That‘s where the real money is.

I mean, you got to keep our eye on the prize, because there‘s a lot of money to be made in the kinds of crony deals that could be rammed through when you have all of that power consolidated in the governor‘s office.

MADDOW: So, you think that this is about trying to achieve ideological aims that people wouldn‘t necessarily vote for, but also about changing the process, sort of putting our thumb on the scales so that the process is easier for them to keep making more decisions like this in the future?

KLEIN: Well, absolutely because unions are a political force. I mean, they represent their members, but they also give them a political voice. And you know, in that fake conversation with David Koch when Scott Walker thought he was talking to David Koch, there was something really revealing that he said. He said, “This is our moment to change the course of history.” That‘s what he said when he thought he was talking to David Koch.

MADDOW: And the reason he purports to have identified that moment is because Wisconsin has a budget deficit.

KLEIN: Right.

MADDOW: And so, therefore, that gives you a reason to change the course of history.

KLEIN: Change the course of history to lock in the whole wish list of policies, and he specifically compared himself to Ronald Reagan and the air traffic controller strike. This was his moment and he said that was the moment that ended communism.

And you know, what‘s the crusade that they‘re fighting here? And they really want a corporate monopoly state. They don‘t want any counter veiling force balancing out the power of corporations.

And so, unions are also a political force at the national level, at the state level. And we‘re in this bizarre situation where Citizens United has allowed corporations essentially to go nuclear on the political stage.

If you think of this as a kind of war, one side just got nukes. They are absolutely unconstrained. And now, they‘re going after the slingshots that the other side has.

MADDOW: Right. The one level—the one pseudo bit of competition they have got in terms of big money in politics. I mean, unions are able to pull the resources of their members in order to try to compete with these big guys. But they are the only ones who even crack the top 10 in terms of corporate giving.

KLEIN: Exactly, exactly. So, there are a few different things—different agendas going on.

MADDOW: Are you heartened by the way this worked out in Wisconsin? Protests in Wisconsin effectively stopping what was happening there, even as the national Republican Party decided to adopt Wisconsin as their signal fight for the country.

KLEIN: I mean, I‘m so heartened by it, Rachel.

MADDOW: Yes.

KLEIN: I mean, it‘s extraordinary. And I mean, just listening to your opening commentary—you know, this very well may be the turning point. And what we‘re seeing is that when people do fight, they sometimes win, which is a really well-kept secret, that, you know, in all the sort of mocking of protests and glib post modern times, sometimes they win. Especially if you‘re willing to do more than, you know, just go to a march once. And just the tenacity of people in Madison, it‘s so inspiring.

MADDOW: But when you have traveled around the world documenting disaster capitalism and shock doctrine, when you have—and I know you traveled around speaking on this topic as well—what have you been able to find out about what makes more effective resistance?

KLEIN: Yes.

MADDOW: I mean, people stand up against this stuff whenever it happens. Sometimes they do so in a way that works, and sometimes they do so in a way that doesn‘t work. What makes the difference whether or not people can win against this?

KLEIN: Well, the key is to name it while it‘s happening. And, you know, that‘s why—that‘s why I wrote this history, a history of how the right has won around the world by exploiting these moments of crisis, because this has been their signature tactic. But we have not been onto them.

If—the whole point of using a crisis, of using a shock is that in those moments of crisis, we‘re disoriented.

MADDOW: Yes.

KLEIN: And—but if we made it while it is happening as people have been doing in Wisconsin, then the tactic doesn‘t work. But, in addition, to that, you also have to say—you also have to have your own story about what is really causing the crisis. And also, if you do have a budget deficit, and there are many states that genuinely are facing budget crisis because of a crisis that was created on Wall Street—

MADDOW: Right.

KLEIN: -- that was moved to Main Street, this crisis, as we know, was deepened by the policy decisions that were made, the decision to bail out banks that instead of bailing out homeowners, instead of bailing out workers. And what that means is that your tax base collapses.

So, your tax base collapsed. And now, we have to pay for the crisis again. First, we paid with a bailout. And now, people are paying with it, these budget cuts.

So, I think the really key part of their resistance is that people are saying, you know what, if you—if you really need some money, why don‘t you go where the money is? Why don‘t you go to the people who have all the money and putting their own proposals on the table? Whether that means Bank of America for not paying taxes, or whether that means defense contractors, whether that means oil and gas companies and their subsidies, people are putting all sorts of proposals on the table.

And that is also deflating the strategy of we have no choice because, of course, there are all kinds of choices.

And what this fight is really about is not unions versus taxpayers, as we‘ve been told. It‘s a fight about who‘s going to pay for the crisis that was created by the wealthiest elite in this country.

MADDOW: Right.

KLEIN: Is it going to be regular working people or is it going to be the people who created the crisis? And that‘s the debate we need to have.

MADDOW: Understanding it and explaining it is—I mean, it‘s stupid to say that‘s half the battle, but, in this case, I think it really is and you are helping.

Naomi Klein, it‘s really nice to see you again. Thanks for coming in.

KLEIN: Thank you. Thanks, Rachel.

MADDOW: So, do you remember when former Senator Alan Simpson said the green weenie thing and we did like a 10-minute segment on this show trying to figure out what he meant? We involved the research librarians at West Point and everything. Well, Senator Simpson has just topped the green weenie thing, which might be the first illegal thing I‘ve ever said on television.

The green weenie thing has been one upped. This time we need the help not of West Point research librarian staff, we need the help of you, gentle viewer. We need your help, next.

(COMMERCIAL BREAK)

MADDOW: So far on this show, we have done one, precisely one, cell phone texty poll question thingy. Last week we did one on a lark, mostly out of jealousy that the other shows do them and we never had.

But it sort of went spectacularly. So, we are at least going to try it one more time. So, please get out your cell phones, get ready to weigh in on what‘s more embarrassing?

All right. Here we go. First, consider Alan Simpson, former Republican senator, a co-chair of the president‘s fiscal commission which is nicknamed the cat food commission because of the commission‘s proposed cuts to Social Security. In that cat food commission co-chair capacity, Mr. Alan Simpson is the man who called Social Security a milk cow with 310 million rhymes with bits, starts with t.

He is the man who sent this show down a rabbit hole trying to figure out what he meant when he suggested sticking your finger down your throat and giving someone a green weenie. That man is still talking.

Here‘s what he said about senior citizens yesterday on FOX News.

(BEGIN VIDEO CLIP)

ALAN SIMPSON, CO-CHAIR, DEFICIT COMMISSION: If they care at all about their children or grandchildren, and sometimes I doubt that. I think grandchildren now don‘t write a thank you for the Christmas presents, they‘re walking on their pants with the cap on the backwards listening to enema man and Snoopy Snoopy Poop Dogg and they don‘t like them.

(END VIDEO CLIP)

MADDOW: We did not edit that tape.

In case you didn‘t catch it, what Senator Simpson said towards the end was, “listening to the enema man and Snoopy Snoopy Poop Dogg.” We assume by enema man he meant the rapper Eminem. We assume that by Ssnoopy Snoopy Poop Dogg, he meant a guy all the kids are listening to these days, if by kids you mean twins who watch shows about boy bands on Nickelodeon.

Politico.com wrote up Senator Simpson‘s comments on FOX News. They front paged the whole Snoopy Snoopy Poop Dogg reference while completely burying the enema man reference as if that was not equally astounding, which means there are still yet further ways in which my world view is alienated from the world view of Politico.com. I thought I had fully gotten (ph) the depths of that alien nation, but no—every day there‘s a new example.

But it does also raise the question what‘s the more embarrassing thing for Alan Simpson to have said, enema man or Snoopy Snoopy Poop Dogg? I know what “Politico” thinks, but what do you think.

But, wait, there‘s more. We have a third and final contender for what‘s more embarrassing. It also comes from FOX News, from one of their daytime anchors whose name is Megyn Kelly. She has a semi-regular feature on her show that‘s called Kelly‘s Court. I think the concept is that because she‘s a lawyer she will have a fake court on TV.

And today, she promoted her “Kelly‘s Court” segment on Twitter as such. Quote, “A man beats a 100-pound woman into a coma over a parking space. He claims she deserves it. Could he be right? In Kelly‘s Court.”

That‘s a great question, Megyn Kelly. And happy International Women‘s Day to you as well.

You will be happy to know in her fake TV court, Megyn Kelly weighed the two sides judiciously and decided on the air on FOX News today that, no, it turns out the woman beaten into a coma over a parking space did not actually deserve it. Fake Judge Kelly settled that tough question.

And so, cell phone. Today‘s question: What‘s more embarrassing? One, cat food commissioner Alan Simpson says kids these days are listening to too much enema man? Or two, cat food commissioner Alan Simpson says kids these days are listening to too much Snoopy Snoopy Poop Dogg? Or three, Megyn Kelly asks, the promotion for her TV show, if a woman deserves to be beaten into a coma? Hey, it‘s an open question.

Which is more embarrassing? Text 1, 2, or 3 to 622639.

Half the reason I enjoy doing this is where I have to say, in all seriousness, message and data rates may apply.

Apparently, the results are available very quickly to these things. If that turns out to be true, I will tell you what they are, 622639. Text 1 for not a nice name for Eminem, 2 for Poop Dogg, 3 for FOX News‘s special commemoration of International Women‘s Day today -- 622639.

OK, I have to go.

(COMMERCIAL BREAK)

MADDOW: One thing that‘s nice is loyalty. A specific form of loyalty that is sort of—that is sort of home state solidarity, is the kind we saw on display today in Wisconsin, actually in the state assembly.

At the most divided moment in politics in that state in generations, the state assembly today was able by voice vote and without dissent to approve a measure lauding the beloved University of Wisconsin football team, so they can agree on nothing else, but at least they can agree on, yay, Wisconsin football. I mean, it‘s ultimately sort of meaningless, but it‘s also nice. Maybe even constructive as that state looks for ways to rebuild after the whole union-stripping thing just about tore the state apart.

But loyalty and home state favoritism have strategic limits as well. Consider the Republican National Committee. Right now, if you want to go to the Republican National Committee Web site, you go to the Internet machine, and you type in RNC.org, and it actually repopulates to this. “Stop Obama‘s Union Bosses.” The entire Republican National Committee Web site has been overlaid with pro-Scott Walker, pro-Wisconsin Republican thing.

From the day that Walker has essentially caved on this fight, Republicans in Wisconsin have essentially lost this thing. But at the Republican National Committee, not only is the Wisconsin fight the front page of the national party‘s Web site, they even stole the URL, you want rnc.org. You get the repopulated URL, Obamasunionbosses.com.

Part of the reason Wisconsin has garnered so much more attention than other states who are having their own big budget fights and even their own big union fights is because of Reince Priebus, because of the Republican National Committee‘s new chairman. He is the former chairman of the party in Wisconsin. His great claim to fame from—when he was running for RNC chairman was that he got Scott Walker elected. And he has made his mission to identify every institution of the Republican Party nationally with Scott walker‘s disastrous, losing fight that he picked in Wisconsin.

The conservative polling firm, Rasmussen, had bad news last week in Wisconsin for Scott Walker. They found that 52 percent of the state was against what he was doing. This is a conservative polling firm.

They report that the results of a new poll today indicating that that bad polling number of Scott Walker just got five points worse. And now, as we reported earlier tonight, Scott Walker is caving on collective bargaining issues he said he would not cave on. This is the beginning of the end and he has lost.

And the new chairman of the Republican Party has done everything he can to hitch the party‘s national wagon to this fight that Walker just picked in Wisconsin and that he just lost.

(BEGIN VIDEO CLIP)

REINCE PRIEBUS, RNC CHAIRMAN: Scott Walker is being a leader not just for the state of Wisconsin but he‘s being a leader of this entire country. I believe that we‘re in a battle for freedom in this country and that same battle for freedom is taking place in Madison. We need to get serious in Madison and this country about spending, Scott Walker is doing it.

(END VIDEO CLIP)

MADDOW: He‘s doing it all right. And thanks to the new Republican Party national chairman, he is not only doing it to the Republican Party in the state of Wisconsin, he is doing it to the Republican Party nationally.

Joining us now, the man who held the Republican National Committee chairmanship before Reince Priebus of Wisconsin, a man whose image can only be hurt by me describing him as my friend. But I say it in hope and in fact—Mr. Michael Steele.

(CROSSTALK)

MICHAEL STEELE, FORMER RNC CHAIRMAN: How are you? I was going to say, how‘s my new best friend?

MADDOW: I realize that it hurts you.

STEELE: No, it doesn‘t. No, it doesn‘t. No. I get a lot—I get a lot of good kudos about the time we‘re on together—

MADDOW: Oh, very good.

STEELE: -- from my friends, my friends on the left and the right. It‘s a good conversation and tonight you put so much out there tonight for me to dance on, I just don‘t know where to begin. I do have a favor of my new best friend.

MADDOW: OK.

STEELE: Would you please say Snoop Doggy Poop Dogg one more time for me?

MADDOW: Wait, wait. Let me make sure I get it right. Snoop, oh, I can‘t—Snoop Doggy Poop Dog, is that it was? Control room, I have an emergency.

Snoop Doggy Poop Dogg.

STEELE: Snoop Poop Dogg.

Alan, you got to love the guy. He makes—he just puts it out there, it‘s real, it‘s Alan.

MADDOW: OK. I mean, what does it say about the president choosing him to be national co-chairman of a commission that‘s going to propose something absolutely terrifying to most Americans that you put in charge of that commission the guy with the green weenie poop dog talk?

(LAUGHTER)

STEELE: Look, because that aside, he is a serious, serious player. He is a guy who‘s been around the budgets, who‘s been, who‘s had to deal with these issues and like his Democratic counterpart, brings a lot of weight to the debate and the discussion, and really kind of moves the agenda forward on something that I think everybody in this country is looking to move forward on, and that‘s bipartisanship, or more importantly, consensus on what‘s the best thing to do. And Alan Simpson is the guy that helped us do that.

MADDOW: I think enema man, snoopy snoop thing undercuts his witty character on these issues. But I think your advice on these things.

STEELE: It‘s a good move by the president.

MADDOW: All right. Fair enough.

Let me ask you about that whole issue about bipartisanship, though. It‘s really interesting today. “The Milwaukee Sentinel Journal,” which is a conservative leaning-paper. They front paged today this analysis saying Scott Walker who they endorsed is now the most disapproved of new governor in the entire country, that this fight has worked out not only poorly in terms of policy, they are editorializing against the union-stripping thing, but poorly in terms of conservative politics in Wisconsin. What do you think the national impact is of Wisconsin?

STEELE: Well, I think—I think that there is, right now, a small national impact. I don‘t think it has rippled out as far as some of my friends on the left would like and hoped.

But I think there are a couple of things to start with, Rachel, to look at. The first issue that the governor had to deal with was a really fundamental one, and is an important one, and that is the privilege of state employees to collectively bargain versus the right of individuals to freely associate. And I think that was enough of this debate from the very beginning as he looked at the budget.

Now, I will take a little asterisk, add this asterisk here because I want to get to with an exception to what you were saying about, is it really about the budget? It is.

The second piece, though, is also the fact that the Democrat senators who somehow wound up in the great state of Illinois, even though they represent the good people of Wisconsin, are basically shirking their duties. And instead of staying in the fight, staying on the floor, pushing through and making the argument and galvanizing people around the argument there on the home court, they went across the state.

So, the one thing I can say, it seems that all (INAUDIBLE) have been doing this too, as well, that if we get in trouble, Rachel, I guess the place to go is Illinois.

MADDOW: But you can‘t say that the Democrats in Wisconsin state Senate haven‘t galvanized people around the position. I mean, everybody in the state lined up behind them.

STEELE: But they‘re not there. They are not heroes, they‘re wimps.

MADDOW: Well—oh, really?

STEELE: They‘re not there. They‘re not there.

MADDOW: They‘re wimps?

STEELE: Come on. I mean, are you going to fight a battle from a distance?

MADDOW: Now, but wait! They‘re not—they‘re not going out there to get better aim because they are myopic can. They left to deny Republicans a quorum. It‘s a state level filibuster that they pull.

STEELE: And remember, Rachel, and I‘m sure you opine on this point, when Republicans did the same, were accused of doing the same thing a few years ago, of slowing down, blocking, not pushing legislation forward because they didn‘t want the outcome of the vote to go the way the outcome was going to go, everybody on the left criticized Republican leadership—

MADDOW: Absolutely.

STEELE: -- in both state and federal government, for doing the same thing.

This is no different. If you‘re going to be elected to office, then damn it, be the leader. Stand in the well of the floor of the Senate and the house and state your case.

If you don‘t have the votes, then work your members to get the votes. You bring those voters to the table with you and say this is the reason why. The small business owner, the fired union worker sitting next to me, this is the reason why this is an important vote. You don‘t do it from another state.

MADDOW: It is totally fair. I will grant you it is totally fair to debate whether or not it is OK to take stalling tactics. Like this is essentially a filibuster.

STEELE: Sure, exactly.

MADDOW: I think you‘re right willing to debate whether or not there‘s procedural fairness. But the idea that they‘re wimps and they‘re not working and they‘re not making their case, I don‘t believe you really believe that. These guys are doing everything they possibly can to make their case and they worked it, and they won it.

STEELE: They are wimps on their approach. I just believe in a fight. I mean, look, I just—you know, what I went through the last two years as RNC chairman, you know? I mean, I believe in the fight.

Despite folks who are battling against you, the fact that you may not have the vote, it is always important to stand before your opposition whether it‘s the governor of your state or anyone else, and look them in the eye, say, this is what I believe in. This is why this is a value to me, and I think—you know, with all due respect to our friends there—you can do it better in your home state than from someplace else.

MADDOW: Well, you are making an excellent case for why Governor Walker should have negotiated with those guys instead of saying, I won‘t talk to you.

But wait. I would love to continue this fight, but we have to take a commercial. Can we fight when we come back?

STEELE: Yes.

MADDOW: OK. Excellent. Thanks.

Michael Steele will be with us in just a moment. We‘ll be right back.

(COMMERCIAL BREAK)

MADDOW: Joining us once again, a man with whom I‘m having a scandalously bipartisan relationship, former RNC chairman, Michael Steele. I know. I won‘t tell anybody.

Let me ask you if you would have hitched the National Republican Party‘s image and reputation to the Wisconsin fight, the way that the new chairman, Reince Priebus, has.

STEELE: I would have but not the way they did. I think, in fact, that they were woefully late to the game. I mean, coming out with a TV commercial that was rather wimpish in its own right—you know, three, four, five weeks after the fact I think undermined the effort there.

I think, something as big as this where you have the DNC and White House mobilizing unions and activists from around the country, in a way that galvanizes this debate, to define this debate early on to me was an opening that was missed. And I think now the governor finds himself in the untenable situation of having to deal with a lot of extra noise. The polling and all the other stuff, that makes it much harder for him to have the kind of leverage in those discussions and debate the way I think he should have had from the very beginning—because as I go back to the first thing it was a legitimate point to raise about the role of collective bargaining in the public sector at a time of fiscal crisis, which gets back to my first point about this is all about the budget.

If you don‘t believe me look at what‘s going on in New York. Governor Cuomo is facing the exact same questions and decisions as Governor Walker minus the collective bargaining piece, but still right now, he‘s making serious cuts there to state employees‘ salaries and benefits because they can‘t afford it.

MADDOW: But there is no correlation, nationwide, between states having budget trouble and collective bargaining.

STEELE: Yes, there is.

MADDOW: There isn‘t. The states doing the best have some of the highest collective bargaining rates of any other states.

STEELE: Right now. But the reality of it, this is—these are contracts as you well know that are negotiated into the future so what New York is going through right now is the result of contracts that were negotiated 10 years ago and the payment is due right now.

MADDOW: You can try to blame it on the unions, but I do not believe you.

STEELE: No, no, I‘m not blaming—I‘m not blaming it on the unions exclusively. I‘m just saying everybody has got to look at budgets and the process of financing states much more carefully than we have up until now.

MADDOW: Michael Steele, former chairman of the Republican National Committee, somebody I always want to keep talking to—thank you so much, sir. It‘s great to have you.

STEELE: Thank you.

MADDOW: If you missed Ed Schultz‘ segment last night about Wall Street‘s role in the spike in food and gas prices, it was jaw-dropping. Part two of his week-long series on this is tonight. It is highly recommended.

And a little while ago, I asked your help to determine the most embarrassing thing in today‘s news. As we speak, a prestigious accounting firm made up of our interns and whoever is still in the newsroom is tabulating those votes. That‘s coming up next.

(COMMERCIAL BREAK)

MADDOW: Where is that cell phone?

All right. Today‘s poll with your cell phone question thingy—I can‘t believe we‘re doing this—was what‘s more embarrassing? Number 1, cat food commissioner Alan Simpson saying kids these days are listening to too much enema man. Number 2, cat food commissioner Alan Simpson saying kids these days are listening to too much Snoopy Snoopy Poop Dogg or 3, Megyn Kelly asked as a promotion for her TV show, if a woman deserves being beaten into a coma. Hey, it‘s an open question.

Which of these is more embarrassing? Drum roll, please. Nine percent of you chosen enema man, 12 percent of chose Snoopy Poop Dogg, and 79 percent chose Megyn Kelly at FOX News.

So, the winner is Megyn Kelly.

Thank you to the more than 12,500 people who responded immediately. I think, we will probably never do this again, but I have so enjoyed it these two times.

Now, it is time for “THE ED SHOW.” Have a great night.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.